Tuesday, 3 March 2015 00:20
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Reuters: Stocks closed lower amid thin trade on Monday on rising interest rates after the central bank scrapped a lower repo penalty and priced a 30-year Treasury bond at a higher rate on Friday.
The Central Bank on Friday removed a lower repo penalty rate of 5% starting Monday, five months after it adopted the measure to boost credit growth.
The bank accepted over Rs. 10 billion at a weighted average yield of 11.73% at an auction of 30-year T-bonds on Friday after it originally planned to borrow only Rs. 1 billion. Dealers said the yield was at least 200 basis points higher than what the market had expected.
The main stock index ended 0.78% lower, or 56.89 points down, at 7,244.40, its lowest close since 9 February.
“Investors are slightly worried and the retailers are keeping out of the market,” said Dimantha Mathew, Manager, research at First Capital Equities Ltd. “The market will be stagnant until Wednesday’s (T-bill) auction, which will show the direction on interest rates.” Shares of Ceylon Tobacco Company Plc fell 1.03%, while Dialog Axiata Plc dropped 1.67%.
Turnover was Rs. 642.3 million ($ 4.83 million), its lowest since 16 February and well below this year’s daily average of Rs. 1.38 billion.
Foreign investors were net buyers of Rs. 54.9 million worth of shares on Monday, extending the year-to-date foreign inflow to Rs. 1.57 billion.
